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SEC Orders Exchanges, FINRA To Develop “Tick Size” Pilot Plan

Last week, the SEC issued an order requiring particular national security exchanges and FINRA to jointly develop and file with the SEC a national market system plan to install a 12-month pilot program directed at expanding minimum quoting and trading increments (i.e., tick sizes) for particular small capitalization stocks. The pilot program will target stocks with a market capitalization of $5 billion or less, a mean daily trading volume of one million shares or fewer, and a share price of $2 per share or more. A control group and three test groups, each consisting of 300 securities, will be included in the program. Control group securities will be tested at the current tick size increment of $0.01 per share, trading exclusively at increments presently allowed. Securities in two of the test groups will be quoted in $0.05 minimum increments, but the increments in which the applicable securities trade will vary. The final test group will be subject to a "trade-at" [...]

By |July 2nd, 2014|Press Releases & News|
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FINRA Fines Goldman Sachs $800k

FINRA fined Goldman Sachs Execution & Clearing, L.P. $800,000 for failing to have reasonably designed written policies and procedures established to stop trade-throughs of protected quotations in NMS stocks from November 2008 to August 2011 in connection with trading in its proprietary alternative trading system, SIGMA-X. As required by the Order Protection Rule, trading centers must trade at the best-quoted prices or route orders to the trading center quoting the best prices. FINRA found that between July 29 and August 9, 2011 there were more than 395,000 transactions executed in SIGMA-X where the execution traded through a protected quotation at a price inferior to the National Best Bid and Offer. During that eight-day window, Goldman Sachs did not realize that it was trading through a protected quotation. The trade-throughs were caused by market data latencies at SIGMA-X and were not discovered in a timely manner. Goldman-Sachs returned $1.67 million to disadvantaged customers. FINRA found that between November 2008 and August [...]

By |July 1st, 2014|Press Releases & News|
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FINRA Expels Success Trade Securities, Inc. And Bars CEO For Fraud

A FINRA hearing panel expelled Success Trade Securities, Inc., which is based in Washington, D.C., from membership and barred Fuad Ahmed, the firm's CEO and President, for the fraudulent sale of promissory notes and for creating a Ponzi scheme. The firm and Ahmed are also jointly and severally ordered to pay about $13.7 million in restitution to 59 investors, most of whom are current and former NFL and NBA players. FINRA issued a complaint against Success Trade and Ahmed in April 2013, charging them with fraud in the sales of promissory notes issued by Success Trade, Inc., the firm's parent company. Additionally, FINRA filed a Temporary Cease and Desist Order to immediately stop activities. The firm and Ahmed consented to the order. The FINRA hearing panel found that Ahmed and Success Trade sold $19.4 million in Success Trade promissory notes to investors while misrepresenting or omitting material facts between February 2009 and March 2013. Ahmed and Success Trade omitted material [...]

By |June 26th, 2014|Press Releases & News|
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FINRA Fines Merrill Lynch

FINRA has fined Merrill Lynch, Pierce, Fenner & Smith, Inc. $8 million for failing to waive mutual fund sales charges for certain charities and retirement accounts. FINRA further ordered $24.4 million in restitution for affected customers on top of the $64.8 million that Merrill Lynch has already repaid to disadvantaged investors. There are many classes of shares relating to mutual funds, and each have different sales charges and fees. Usually, Class A shares offer lower fees than Class B or C shares but charges customers an initial sales charge. A number of mutual funds waive this charge for retirement accounts. Some waive it for charities. The majority of mutual funds offered by Merrill Lynch had such waivers to retirement plan accounts and disclosed them in their prospectuses. Yet, since January 2006, Merrill Lynch at various times did not waive these charges for affected customers when it offered Class A shares. Subsequently, about 41,000 small business retirement plans and 6,800 charities [...]

By |June 25th, 2014|Press Releases & News|
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